Correlation Between Adams Natural and Us Strategic
Can any of the company-specific risk be diversified away by investing in both Adams Natural and Us Strategic at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Adams Natural and Us Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adams Natural Resources and Us Strategic Equity, you can compare the effects of market volatilities on Adams Natural and Us Strategic and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Adams Natural with a short position of Us Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Natural and Us Strategic.
Diversification Opportunities for Adams Natural and Us Strategic
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Adams and RUSTX is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Adams Natural Resources and Us Strategic Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Strategic Equity and Adams Natural is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Adams Natural Resources are associated (or correlated) with Us Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Strategic Equity has no effect on the direction of Adams Natural i.e., Adams Natural and Us Strategic go up and down completely randomly.
Pair Corralation between Adams Natural and Us Strategic
Considering the 90-day investment horizon Adams Natural is expected to generate 2.05 times less return on investment than Us Strategic. But when comparing it to its historical volatility, Adams Natural Resources is 1.01 times less risky than Us Strategic. It trades about 0.19 of its potential returns per unit of risk. Us Strategic Equity is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 1,781 in Us Strategic Equity on September 4, 2024 and sell it today you would earn a total of 110.00 from holding Us Strategic Equity or generate 6.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Adams Natural Resources vs. Us Strategic Equity
Performance |
| Timeline |
| Adams Natural Resources |
| Us Strategic Equity |
Adams Natural and Us Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adams Natural and Us Strategic
The main advantage of trading using opposite Adams Natural and Us Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Natural position performs unexpectedly, Us Strategic can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Us Strategic will offset losses from the drop in Us Strategic's long position.| Adams Natural vs. Liberty All Star | Adams Natural vs. Tri Continental Closed | Adams Natural vs. Royce Value Closed | Adams Natural vs. Central Securities |
| Us Strategic vs. Dreyfus Natural Resources | Us Strategic vs. Adams Natural Resources | Us Strategic vs. Icon Natural Resources | Us Strategic vs. Calvert Global Energy |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stocks Directory module to find actively traded stocks across global markets.
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